That was a good show, and I dont even like This American Life. Recommended.posted by elendil71 at 3:57 PM on March 2, 2009

great show, thanks for posting.

i enjoyed 365 very much as well, way back when this all really started.posted by Substrata at 4:00 PM on March 2, 2009

So, what I seemed to gather from this show is that full-scale banking nationalization is inevitable and only delayed at the moment due to mechanics and to an extent politics. Which would explain the crazy right-wing ranting we have seen over the past couple of weeks.

Did I miss something? I have listened to the show three times now. My interpretation would tend to make me think the time to do my (safe, 30-year fixed, no income instability in the future) 4.x% refi is NOW.posted by mwhybark at 4:01 PM on March 2, 2009

Everytime they do one of these I think "Great! I can finally stop worrying about the inchoate, incoherent financial system and develop an opinion, just like all those guys yelling at me on the picture tube!"

...

And then they start talking, and I hear story problems, and my brain shuts off, bringing me no closer to comprehension.posted by orville sash at 4:07 PM on March 2, 2009

I saw "House of Cards" last night and highly recommend it. It covers the entire mess from ground zero (Orange County), with Greenspan saying how little he understands the products, and how shocked he was when he heard the figures. It also shows how pizza delivery boys and car salesmen pushed garbage mortgages with Wall Street's eager funding (with cutaways to George W. Bush quoting the rise in home ownership as a great achievement). Shockingly, it has a key quote from one of the players that seem to frame the whole CDO packaging of subprime mortgages (sold as securities with bogus AAA ratings) as a known and deliberate fraud targeting Europe and Asia.posted by Brian B. at 4:17 PM on March 2, 2009

This money stuff is all well beyond me. However, I do have a wife who has worked for a number of years at a bank, a bank with some 75 or so branches. Her bank is not in trouble the way so many are, nor did they get in trouble a number of years ago when other banks did. Why? They were conservative in what they did, in how they lent money, in what mortgages and loans got approved.

In what little I have read about the current mess, it seems to me that a number of years ago both parties allowed for regulations that had been in place to be removed...Ronnie, Carter, Rubin, Clinton, Bush etc --all favored deregulation because things somehow would make lots of money and risks were not in sight, or were not to be seriously thought about.

I am reminded of the piece last week in the NY Times about the housing debacle in Tampa area, and how every other person sold or bought houses in addition to having regular jobs--and then...it all fell apart and house after house lost value, mortgages not met, boarded up places, and so on.But with over a thousand people per month moving into the state no one thought there might be trouble ahead. Though conservatives like to blame the poor who could not afford homes, there are many who are losing jobs and can not afford homes; illnesses not covered by health plans; and...well you can go on and on. The point: these things all work in a circular fashion and we all get taken down.posted by Postroad at 4:54 PM on March 2, 2009

I'm beginning to suspect one reason why you're still seeing pushback from the Right on nationalization is because they know nationalization is our last, best hope of ending this crisis quickly (and by quickly, read "before the next presidential election"). And since they don't want Obama to succeed, they'll do all they can to stop it, even though the main alternative they've forced to argue for, to just let the banks fail, was why we ended up with the Great Depression in the first place.

That pisses me off to no end, but then this is a GOP that has become so devoid of ideas the last ten years it does not surprise me in the least.posted by dw at 4:58 PM on March 2, 2009

I've been waiting for this conversation. If you liked this, you should definitely subscribe to the Planet Money podcast. They get the most amazing interviews. Want to know about nationalization? They've got the guy who last nationalized a bank. Want to know how similar situations have been handled in the past? They've got the former head of the IMF.

The only complaint I had with the This American Life episode is that a lot of the content came from the Planet Money podcasts. So if you've been obsessively listening to the podcasts and reading the blog (and following them on twitter), there wasn't a ton of new content. That's more my problem than theirs though ;) I did find the explanation of bank's balance sheets to be helpful.

They also hint at a possible sneak attack privatization on a Friday afternoon when nobody expects it.

I thought that was interesting too. They said that if the government was going to nationalize some big banks, they would be acting just as they are now. They can't telegraph their intentions. I got the feeling that the Planet Money crew suspects that is going on, but they can't say it any more openly without being irresponsible.

This stuff is scary. They keep talking to experts who explain how dire the situation will be if certain things come to pass. They then quickly follow up by saying they don't think these worst case scenarios will hapen. It doesn't seem that far fetched to me though. The only way we come out of this is if the assets really are currently underpriced. Considering that most of the problem assests are based on housing prices, I don't see how they bounce back. Housing was a bubble. I don't think it can be reinflated. If that's true.... Yikes.posted by diogenes at 5:04 PM on March 2, 2009

Heh. Shelia Blair says the banks are "well capitalized." No, our banking system is insolvent. If the bond market goes, and it will if we don't clean up the insolvent banking system, we are well and truly fucked.posted by ryoshu at 5:40 PM on March 2, 2009

They also hint at a possible sneak attack privatization on a Friday afternoon when nobody expects it.

I thought that was interesting too. They said that if the government was going to nationalize some big banks, they would be acting just as they are now. They can't telegraph their intentions.

I thought it was a bizarre note to end on, darkly hinting at a surprise nationalization without ever (IIRC) discussing why policy makers would hide their intentions, on a show that is supposed to explain these things. Overall a good show though.posted by thrako at 5:52 PM on March 2, 2009

I've been really loving the Planet Money podcast system. It's a really fun, loose, yet serious and high-minded look at the economic world, by far the best addition to the NPR lineup in awhile. Looking forward to listening to this as I clean my house this evening... (It actually makes cleaning an enjoyable experience.)posted by ph00dz at 6:03 PM on March 2, 2009

This American Life did another piece with Chicago Public Radio and Planet Money that ran during All Things Considered the other day called Toxic Assest Sleuth that you might also like. Just to disclose, the subject of the story is the business partner of a good friend of mine. They previously talked with Planet Money about the difficulty of unraveling these kinds of securities during an October edition of the Planet Money podcast (starts around 7:00 in).posted by The Straightener at 6:08 PM on March 2, 2009 [2 favorites]

There's no propping up of the housing market. I think what Obama, Inc. is trying to do is cushion the landing, protect the most responsible home buyers who are nevertheless in or close to foreclosure, and slow the drop a bit. But there's not enough money to reinflate houses to prior prices, and heck, even if we could, that'd kinda suck -- houses were costing way too much, locking lower middle class folks out of EVER owning a house (and being able to pay for it, anyway).

Someone has to eat all those losses, and all losses can't all be paid off with general taxpayer moolah, because there's not enough of that. The mortgage owners are going to have to eat some losses, and the home owners are going to eat some losses too. And the taxpayer will eat some. If your home has declined in value then you've already eaten some losses in terms of equity.

It's a very deflationary feeling out there now. Wages being cut or frozen, bonuses eliminated, benefits cut back or cut entirely, prices of goods dropping, 'sales' becoming the permanent price, commodity prices dropping, and on and on. I don't think full-bore deflation has sunk its claws into the economy deeply yet, but it's getting there. Give people six months of watching wages/prices declining and that's what they'll come to expect, and they'll postpone buying at any and every opportunity...and then we're screwed.

Some of that gubment moolah better start flowing really soon or we're gonna fall into a deflationary hole. I hope it's not too late already.posted by jamstigator at 7:02 PM on March 2, 2009

Morgenthau ran into similar federal displeasure a decade ago when he brought criminal charges against leaders of the Pakistan-based Bank of Credit and Commerce International (BCCI), which collapsed in a mega-fraud that made $8 billion "disappear." An investigation by the Senate Subcommittee on Terrorism, Narcotics and International Operations, headed by Sen. John Kerry, D-Mass., revealed that the CIA used BCCI to finance clients, including Osama bin Laden.

Ah, banking. I would venture there's a whole lot about we don't know.posted by ornate insect at 10:23 PM on March 2, 2009

the IMF would say, "quit whining and privatize nationalize",

I suspect you may have mistyped, forgive me if I am incorrect.

You are correct. See? This is why I usually stay out of economics threads.posted by chillmost at 12:34 AM on March 3, 2009

They also hint at a possible sneak attack privatization on a Friday afternoon when nobody expects it.

Listened to it tonight, and greatly enjoyed it - though I was surprised at how much I already understood (Yay MeFi Economic FPPS!), but I was left wondering how a weekend nationalization of, say, Citigroup would affect shareholders and if they could block such an action if they felt it was harmful to their interests.posted by Alvy Ampersand at 9:29 PM on March 4, 2009

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